Facility: 81 Hole Private Golf Community with 4 Clubhouses, Marina, and 1,200 Members
Location: Southeastern United States
Ownership: Private Ownership/Developer
Focus: Containing Costs and Return to Profitability
About: This is a very successful well established golf community with associated real estate, marina and many other components. Their $23 Million operating budget has gotten away from them leading to an annual loss of $1.5 Million.
Challenges We Faced:
The challenge was a familiar one at this private club, despite over $20 Million in gross revenue, the club was still operating at a deficit of $1.5 Million. Operating expenses were out of line with typical healthy private club ratios, but ownership didn’t know where to begin. The club is very large with many product and service offerings.
The developer brought in outside management to find ways to operate the club. The 3-year goal was to return operations to break even or a slightly positive return on investment.
Solutions for Golf Community Operational Gains:
The steps we took to turn this club around began with coming to understand all the details of the situation they were in.
Management conducted a full competitive analysis on all club programming and pricing. This included all membership offerings, fee structures, and all food and beverage offerings. It was determined that all of these service areas were in line in the marketplace.
The next step was to conduct a highly detailed financial analysis of every single line item on the budget. We quickly found that vendor pricing and our procurement processes had to be reconsidered.
At private clubs, Department Directors who have purchasing power tend to buy from only a few vendors that they’re comfortable with. In many cases, they are offered benefits or persona kickbacks like tickets to games or merchandise. That’s certainly nice for the individual, but it comes at great cost to the organization. With that in mind, we established a club-wide requirement that all purchases greater than $200 must have at least 4 bids from separate vendors. Vendors now were forced to compete for our business with more aggressive pricing and terms. Although our long-standing vendors didn’t care for this procedure, this initiative alone led to over $750,000 in savings.
We conducted an analysis of every operating system and subscription service in every area of the club. As this research normally does, it uncovered dozens of phone lines and other communication services that were being paid but not being utilized. We were able to discontinue many of these services and cut costs substantially.
Our market research became very valuable when we began conducting monthly educational PowerPoint presentations to the community and membership base. They were so well attended by members and property owners within the community that we conducted 4 daily sessions to accommodate demand. We told stories highlighting a particular line item or two during these presentations, breaking down in detail the reality of what things cost. For example, most private clubs give away golf tees – but not to the tune of $17,000 annually. Simple awareness led to an $11,000 reduction in this line item. Bigger picture, these engaging discussions also helped us engage and retain 4,800 non-member homeowners as daily fee customers at the club and restaurants.
The net result of all of this was a turnaround from a $1.5 Million loss to a Year 1 $1 Million gain – golf community operational gains of $2.5 Million.
The developer was delighted with these quick results, allocating the $1 Million toward some overdue capital improvements to the clubhouse and recreational facilities.
Members saw improvements in club amenities, service levels, and overall transparency with ownership operations – without dues increases.
Big win – win.